"any property that has a situs in this state and that,
except as provided in subsection (3) of this section, is used or held for
future use by any company in performing or maintaining any of the following
businesses or services or in selling any of the following commodities, whether
in domestic or interstate commerce or both, and whether mutually, or for hire,
sale or consumption by other persons:

Before an agency adopts a rule, it
must give notice of its intended action pursuant to ORS 183.335(1), which,
among other things, requires the agency to provide

"[a] statement of fiscal impact identifying state
agencies, units of local government and the public which may be economically
affected by the adoption, amendment or repeal of the rule and an estimate of
that economic impact on state agencies, units of local government and the
public. In considering the economic effect of the proposed action on the
public, the agency shall utilize available information to project any
significant economic effect of that action on businesses which shall include
a cost of compliance effect on small businesses affected."

"The department held a series of meetings
at which the central assessment statutes were discussed at length. At least
one meeting focused specifically on the businesses and services that
appropriately fall under the definition of \communication\ as outlined in the
law. Cable and internet service providers were invited and several
participated in those meetings. In the March 2006 Interim House Revenue
Committee the department described to the committee the interpretation provided
in this rule and informed the committee that the department would begin
centrally assessing cable and internet service providers in the near
future."

(Emphasis added.)

OCTA contends that the statement is
inadequate because, among other reasons, it does not provide "[a]n
estimate of the number of small businesses subject to the proposed rule,"
as contemplated by ORS 183.336(1)(a). The
department responds that the statement comports with ORS 183.336(1)(a) because
it "identifies the types of business that might be affected, and
acknowledges that there are a number of those businesses that will be moved
from local assessment to central assessment." Alternatively, the
department argues that "[a]ny alleged 'failure' to specify or estimate the
precise number of small businesses" was due to the fact that
"research was ongoing to include all such businesses," and,
therefore, the statement was adequate because it was based on "available
information." See ORS 183.336(2) ("An agency shall utilize
available information in complying with the requirements of this
section."). We agree with OCTA that the department's statement falls
short of meeting the statutory requirement.

Resolving the parties' dispute
requires us to construe the meaning of ORS 183.336(1)(a), which we do by first
examining the text of the statute in context, along with any relevant
legislative history. State v. Gaines, 346 Or 160, 171-72, 206 P3d 1042
(2009). Statutory terms that are not defined are generally given their plain
and ordinary meanings. PGE v. Bureau of Labor and Industries, 317 Or
606, 611, 859 P2d 1143 (1993). However, words that have well-defined legal meanings
are given those specialized meanings. See, e.g., Dept. of
Transportation v. Stallcup, 341 Or 93, 99, 138 P3d 9 (2006) ("[W]e
give words that have well-defined legal meanings those meanings."); McIntire
v. Forbes, 322 Or 426, 431, 909 P2d 846 (1996) ("Analysis of text also
includes reference to well-established legal meanings for terms that the
legislature has used.").

Applying those principles, we note,
first, that, on its face, there can be little doubt that ORS 183.336(1)
establishes the minimum content that must be included in the "statement of
cost of compliance effect on small businesses" mandated by ORS 183.335(2)(b)(E).(6)
The statute uses the verb "must," which, although in common usage can
carry a variety of shaded meanings, see Webster's Third New Int'l Dictionary
1492 (unabridged ed 2002) (defining the verb "must," among other
definitions, to mean "is commanded or requested to," "is urged
to : ought by all means to," "is compelled by physical
necessity to," "is obliged to : is compelled by social
considerations to," "is required by law, custom, or moral conscience
to"),generally connotes a required action when used in law. See
Bryan A. Garner, A Dictionary of Modern Legal Usage 577-78 (2d ed
1995) (explaining that, in legal drafting, "must" is generally used
in the sense of "an absolute requirement"); id. at 941 ("Under
the American rule * * *, [must] means 'is required to' and is used primarily
when an inanimate object appears as subject of the clause. * * * Under the ABC
rule * * *, must denotes all required actions, whether or not the
subject of the clause performs the action of the verb[.]"(7)).
That understanding is supported by the legislative history surrounding the
enactment of ORS 183.336 (discussed more fully below). Audio Recording, Senate
Floor Debate, HB 3238-B, July 30, 2005, at 1:28.13 (statement of Sen Frank
Shields) (explaining, as carrier of the bill, that it "adds a minimum
content to the fiscal impact statements agencies are currently required to do
for proposed rules"), http://www.leg.state.or.us/listn/ (accessed Sept 20,
2010).

We turn next to the text of the
specific requirement at issue here--that the small business impact statement
must include "[a]n estimate of the number of small businesses subject to
the proposed rule[.]" ORS 183.336(1)(a). The noun "estimate,"
is defined, in relevant part, to mean "the act of appraising or valuing :
VALUATION, CALCULATION"; "a judgment made from usually mathematical
calculation especially from incomplete data : a rough or approximate
calculation (as of the number, amount, or size of anything)." Webster's
at 779. "Number" means "an arithmetical total : sum
of the units involved : AGGREGATE <~ of desks in the room> <~
of people in the hall>"; it can also mean "an unspecified total :
SEVERAL." Id. at 1549-50. In this case, of course, the units
involved are "small businesses" as defined in ORS 183.310(10). See
___ Or App at ___ (slip op at 4 n 5). Thus, at a minimum, ORS
183.336(1)(a) requires the small business impact statement to include an
approximate calculation of the total (even if nonspecific) small businesses subject
to the proposed rule.

Here, the statement relied on by the
department to satisfy that requirement states only the following:

"There are several cable and internet
companies that the department will start assessing in the 2009 tax year.
(There is ongoing research to ensure all appropriate companies are
included.)"

As explained below, that statement is insufficient to comply
with the requirements of ORS 183.336(1)(a).

First, even assuming that
"several" is an adequate "estimate" for purposes of the
statute--an issue we expressly do not decide--the statement fails to satisfy
the statutory requirement that the estimate relate to the number of small businesses
potentially affected by the rule. Although the statement appears under a
heading in the notice that generally tracks the statutory requirement--that is,
to "[e]stimate the number of small businesses and types of business and
industries with small businesses subject to the rule"--nothing in the
information provided by the department indicates that the "several cable
and internet companies" referred to are small businesses, rather than
businesses generally. Moreover, the parenthetical information included in the
department's statement indicates quite clearly to the contrary: it refers to
efforts being made to ensure that "all appropriate companies"
are assessed under the proposed rule. (Emphasis added.) Thus, viewed as a
whole, the statement fails to demonstrate that the department properly focused
on the number of small businesses, as opposed to businesses generally,
that would be affected by the proposed rule. And that is precisely what is
explicitly required by ORS 183.336(1)(a).

Next, the department's argument that
any deficiency in the rule is excused by the fact that it was based on
"available information" is unpersuasive. To be sure, ORS 183.336(2)
provides that "[a]n agency shall utilize available information in
complying with the requirements of this section." An essentially
identical provision appears in ORS 183.335(2)(b)(E) ("In considering the
economic effect of the proposed action on the public, the agency shall
utilize available information to project any significant economic effect of
that action on businesses which shall include a cost of compliance effect on
small businesses affected." (Emphasis added.)). ORS 183.336 is part of
the same statutory scheme as ORS 183.335(2)(b)(E); thus, prior judicial
interpretations of the latter inform our analysis of the former. Keller v.
Armstrong World Industries, Inc., 342 Or 23, 35, 147 P3d 1154 (2006)
(considering prior construction of other similarly-worded statutes of
limitations in construing statute of limitations); seealsoShin v. Sunriver Preparatory School, Inc., 199 Or App 352, 379, 111 P3d 762 (2005),
rev den, 339 Or 406 (the legislature's choice to continue using a
particular word in amendments to a statute, when Oregon courts have previously
interpreted the word "evidences an intent to maintain the interpretation
set forth in those cases").

In Dika v. Dept. of Ins. and
Finance, 312 Or 106, 817 P2d 287 (1991), the Supreme Court considered the
meaning of the phrase as used in ORS 183.335(2)(b)(E)(8)
in the context of an agency fiscal impact statement that identified two types
of entities that would be economically affected by the proposed regulatory
action, but provided no further information. The court concluded that the
statutory requirement that an agency "utilize available information"
to estimate the economic effect of a proposed rule means that the agency must
either provide a quantifiable estimate of that impact or articulate reasons why
no such estimate is possible, "such as those that might be related to the
inadequacy of 'available information[.]'" Id. at 110. Because the
agency's fiscal impact statement failed to do either, the court invalidated the
rule. Id.

In cases since Dika, we
have focused on the policy objectives underlying ORS 183.335(2)(b)(E) to
determine the adequacy of agency fiscal impact statements. For example, in The
Building Department, LLC v. DCBS, 180 Or App 486, 492, 43 P3d 1167 (2002),
we explained that the "overarching objective" of the fiscal impact
statement requirement "is to provide protections against arbitrary and
inadequately publicized government conduct." We thus concluded that,

"in instances where the information provided is
sufficient to allow the public and affected businesses to assess their
particular positions and financial situations and determine the likely impact
on them, a procedural challenge to a rule based on an allegedly inadequate
fiscal impact statement will fail. If, however, the statement falls short of
that standard, the rule must be declared invalid."

Id. at 493 (internal citations, quotation marks, and
brackets omitted). Applying that rule, we then held that the fiscal impact
statements at issue, which described the anticipated economic effect of the
proposed rules as "undetermined at this time," were insufficient to
satisfy that purpose because they failed to

"explain why the effect was undetermined or, more
importantly, to allow potentially affected parties to evaluate their positions
and understand what information, if any, [the agency] might need in order to
make an informed decision."

Id. (internal quotation marks omitted).

Notwithstanding the foregoing,
the relevant context and legislative history of ORS 183.336 indicate that the
small business impact statement portion of the fiscal impact statement is
intended to serve a slightly different purpose than the fiscal impact statement
generally. Specifically, as amplified below, the objective of the legislature
in enacting ORS 183.336 was to ensure that an agency recognize and evaluate the
potential economic effect of a proposed regulatory action on small business--at
least as to the particular factors listed in that statute--at the time the
rule is being developed and drafted--so that the agency can, if appropriate
under ORS 183.540, take steps to address that impact in the rule itself.

The general, unadorned requirement in
ORS 183.335(2)(b)(E) that a fiscal impact statement accompanying a notice of
proposed rulemaking include a statement of the "cost of compliance effect
on small businesses affected" has been in effect since 1981. See Or
Laws 1981, ch 755, § 2. At that time, the legislature also enacted ORS 183.540,
see ___ Or App at ___ (slip op at 13 n 9), which required an agency to
take certain ameliorative actions if the agency's economic effect analysis
showed a significant adverse effect on small businesses. Or Laws 1981, ch 755,
§ 4.

Representative Kim Thatcher carried
the bill on the House floor, explaining to her colleagues that it would make
several improvements to the Administrative Procedures Act, including
"improv[ing] the quality of agency fiscal impact statements" and
"helping agencies identify major impacts of proposed rules on small
business early on in the rulemaking process so that there is plenty of
opportunity to make changes before the rule goes into effect." Audio
Recording, House Floor Debate, HB 3238-A, Jun 30, 2005, at 52:51 (statement of
Rep Kim Thatcher), http://www.leg.state.or.us/listn/ (accessed Sept 20, 2010).
She also noted that the bill's drafters had worked hard to create a bill that

"will not unduly impede an agency's ability to enact
needed regulations while ensuring that those regulations benefit from maximum
attention to their impacts on small business and maximum input from
stakeholders of all kinds in their drafting and development."

The preamble to the bill further
informs our understanding of the legislature's intention in enacting ORS
183.336. See, e.g., Strunk v. PERB, 338 Or 145, 162-63, 108 P3d
1058 (2005) (describing the legislature's primary motivation in enacting the
2003 PERS legislation by reference to the preamble); Havi Group LP v. Fyock,
204 Or App 558, 564, 131 P3d 793 (2006) ("Included in pertinent context
are statements of statutory policy."); Warburton v. Harney County,
174 Or App 322, 329, 25 P3d 978, rev den, 322 Or 559 (2001) ("While
it is true that a policy statement * * * should not provide an excuse for
delineating specific policies not articulated in the statutes, such a general
purpose statement may serve as a contextual guide for the meaning of a
particular statute."). Here, the preamble indicates that the legislature
was concerned about the "unnecessary and disproportionately burdensome
demands" that fall on small businesses as a result of uniform regulatory
requirements. See Or Laws 2005, ch 807 (preamble). The legislature
also recognized that "alternative regulatory approaches that do not
conflict with the stated objective of applicable statutes may be available to
minimize the adverse economic effect of rules on small businesses," and
concluded that agencies should, among other things, "examine the effect of
proposed and existing rules on small businesses." Id.

What we glean from that history and
context is that the legislature, in enacting ORS 183.336, wanted to ensure that
agencies informed themselves--at least in the particulars described in that
statute--of the potential economic effect of a proposed rule change on small
business at the time the rule was being drafted, rather than after the fact.
In doing so, the legislature hoped to maximize the opportunities for an agency
to reduce that effect on small businesses where appropriate. Understanding the
breadth of a proposed rule change as it relates to small business--that is,
estimating just how many small businesses would be subject to its reach--was
one of the particulars that the legislature determined was important to further
that objective.

In light of that statutory objective,
if an agency is unable, based on available information, to provide the data
required by ORS 183.336, the agency must, at least, explain why that is so.
Here, the department's statement failed to explain why it was unable to project
the number of small businesses that would be subject to the proposed rule.
Simply stating that "[t]here is ongoing research to ensure all appropriate
companies are included" is insufficient because, contrary to the intent of
the statute, it does nothing to show that the agency--in drafting and
developing the rule--made the necessary effort to ascertain the required
information. As in The Building Department, LLC, given the purpose
underlying ORS 183.336, it is not enough for an agency to say "we don't
know," without any attempt to explain "why we don't know." 180
Or App at 493. In short, the department's small business impact statement fails
to demonstrate that the agency engaged in the type of informed rulemaking
contemplated by the legislature when it enacted ORS 183.336.

In sum--and whatever its other
shortcomings--the fiscal impact statement issued by the department in its
notice of proposed rulemaking for OAR 150-308.515(1)(h), at a minimum, failed
to include a legally sufficient small business impact statement as required by
ORS 183.336. Accordingly, we must invalidate the rule. ORS 183.400(4)(c)
(subject to an exception not applicable here, see ORS 183.400(6), the
court shall declare a rule invalid if it finds that it was adopted without
compliance with the applicable procedures).

OAR 150-308.515(1)(h) held invalid.

1.All citations
in this opinion to statutes in ORS chapter 308 are to the 2007 versions, which
were in effect when the rule at issue was promulgated. Those statutes were
amended by the 2009 Legislative Assembly, effective January 1, 2010. See
Or Laws 2009, ch 128.

"(1) 'Property,' as used in ORS 308.505 to
308.665, includes all property, real and personal, tangible and intangible,
used or held by a company as owner, occupant, lessee or otherwise, for or in
use in the performance or maintenance of a business or service or in a sale of
any commodity, as set forth in ORS 308.515[.]"

"(1) Companies engaged in communication
business or service include cable companies and internet service provider
companies.

"(2) 'Cable Companies' engage in a variety
of communication activities, such as providing television programming, radio
programming, high speed internet access, or telecommunication services.

"(3) 'Internet Service Providers' (ISPs),
also referred to as Internet Access Providers (IAPs), provide internet access
for a fee.

"(4) Cable companies and ISPs provide
communication services via radio frequency signals transmitted through fixed
optical fibers, coaxial cables (used in the transmission of high frequency
signals) or satellite. These services may be wired or wireless and are
provided to customers via a network system of property that typically cover
multiple counties, states or countries."

4.In its first
assignment of error, OCTA contends that the fiscal impact statement was
inadequate under ORS 183.335(2)(b)(E) because it did not provide a quantitative
estimate of the economic effect of the rule on affected companies or the
department itself, or an explanation for having failed to do so. The state
responds that (1) the notice was sufficient to satisfy the purpose of the
statute, i.e., to alert potentially interested parties that they may be
economically affected by the rule; and (2) because any potential economic
impact identified by OCTA was created by the underlying statute, not the rule,
the notice was sufficient. Because we invalidate the rule on the basis of
petitioner's second assignment of error, we need not resolve that issue.

5.For purposes of
ORS chapter 183, "economic effect" is defined to mean "the economic
impact on affected businesses by and the costs of compliance, if any, with a
rule for businesses, including but not limited to the costs of equipment,
supplies, labor and administration," ORS 183.310(3); the term "small
business" means "a corporation, partnership, sole proprietorship or
other legal entity formed for the purpose of making a profit, which is
independently owned and operated from all other businesses and which has 50 or
fewer employees," ORS 183.310(10).

7.The
"American rule" and "ABC rule" refer to two approaches
commonly used by legal drafters to avoid the ambiguity sometimes created by the
use of the word "shall." Garner, Modern Legal Usage at 941.
For a fuller discussion of that problem and the "horrific muddle"
that has been made of verbs used to connote words of authority in legal
drafting, see id. at 939-42.

"If the statement of cost of compliance
effect on small businesses required by ORS 183.335(2)(b)(E) shows that a rule
has a significant adverse effect upon small business, to the extent consistent
with the public health and safety purpose of the rule, the agency shall reduce
the economic impact of the rule on small business by:

"(1) Establishing differing compliance or
reporting requirements or time tables for small business;

"(2) Clarifying, consolidating or
simplifying the compliance and reporting requirements under the rule for small
business;

"(3) Utilizing objective criteria for
standards;

"(4) Exempting small businesses from any or
all requirements of the rule; or

"(5) Otherwise establishing less intrusive
or less costly alternatives applicable to small business."

10.The bill as
passed by the House, HB 3238-A, contained more comprehensive changes to
rulemaking procedures than were ultimately enacted by the legislature. The
bill was substantially revised in the Senate; however, the provision that
became ORS 183.336 remained relatively unchanged throughout that process.
Specifically, subsection (1)(a) of the statute, as it passed the House,
required the small business impact statement to both estimate the number of
small businesses subject to the rule and identify those businesses. The
latter requirement was changed in the Senate to the existing language, which,
as noted, requires, in addition to the estimate, an identification of the "types
of businesses and industries with small businesses subject to the rule."
(Emphasis added.)

11.In addition to
enacting ORS 183.336, the bill made other changes to address the effect of
regulatory action on small businesses. For example, it amended ORS 183.333, to
provide that, if an agency appoints an advisory committee to assist in the
rulemaking process, the agency "shall seek the committee's recommendations
on whether the rule will have * * * a significant adverse impact on small
businesses. If the committee indicates that the rule will have a significant
adverse impact on small businesses, the agency shall seek the committee's
recommendations on compliance with ORS 183.540." Or Laws 2005, ch 807, §
4. As noted above, the bill also amended ORS 183.540. Id. at § 6.